512 U.S. 415 (1994), 93-644, Honda Motor Co. v. Oberg

Docket Nº:Case No. 93-644
Citation:512 U.S. 415, 114 S.Ct. 2331, 129 L.Ed.2d 336, 62 U.S.L.W. 4627
Party Name:HONDA MOTOR CO., LTD., et al. v. OBERG
Case Date:June 24, 1994
Court:United States Supreme Court
 
FREE EXCERPT

Page 415

512 U.S. 415 (1994)

114 S.Ct. 2331, 129 L.Ed.2d 336, 62 U.S.L.W. 4627

HONDA MOTOR CO., LTD., et al.

v.

OBERG

Case No. 93-644

United States Supreme Court

June 24, 1994

Argued April 20, 1994

CERTIORARI TO THE SUPREME COURT OF OREGON

Syllabus

After finding petitioner Honda Motor Co., Ltd., liable for injuries respondent Oberg received while driving a three-wheeled all-terrain vehicle manufactured and sold by Honda, an Oregon jury awarded Oberg $5 million in punitive damages, over five times the amount of his compensatory damages award. In affirming, both the State Court of Appeals and the State Supreme Court rejected Honda's argument that the punitive damages award violated due process because it was excessive and because Oregon courts have no power to correct excessive verdicts under a 1910 amendment to the State Constitution, which prohibits judicial review of the amount of punitive damages awarded by a jury "unless the court can affirmatively say there is no evidence to support the verdict." The latter court relied heavily on the fact that the State's product liability punitive damages statute and the jury instructions in this case provided at least as much guidance as those upheld in Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1. The court also declined to interpret Haslip to hold that due process requires the amount of a punitive damages award to be subject to post verdict or appellate review, and noted that Oregon courts are not powerless because they may vacate a judgment if there is no evidence supporting the jury's decision, and because appellate review is available to test the sufficiency of jury instructions.

Held:

Oregon's denial of review of the size of punitive damages awards violates the Fourteenth Amendment's Due Process Clause. Pp. 420-435.

(a) The Constitution imposes a substantive limit on the size of punitive damages awards. Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1; TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443. The opinions in these cases strongly emphasized the importance of the procedural component of the Due Process Clause, and suggest that the analysis here should focus on Oregon's departure from traditional procedures. Pp. 420-421.

(b) Judicial review of the size of punitive damages awards was a safeguard against excessive awards under the common law, see, e. g., Blunt v. Little, 3 F. Cas. 760, 761-762, and in modern practice in the federal courts and every State, except Oregon, judges review the size of such awards. See, e. g., Dagnello v. Long Island R. Co., 289 F.2d 797, 799- 800, n. 1. Pp. 421-426.

Page 416

(c) There is a dramatic difference between judicial review under the common law and the scope of review available in Oregon. At least since the State Supreme Court definitively construed the 1910 amendment in Van Lom v. Schneiderman, 187 Ore. 89, 210 P.2d 461, Oregon law has provided no procedure for reducing or setting aside a punitive damages award where the only basis for relief is the amount awarded. No Oregon court for more than half a century has inferred passion or prejudice from the size of a damages award, and no court in more than a decade has even hinted that it might possess the power to do so. If courts had such power, the State Supreme Court would have mentioned it in responding to Honda's arguments in this very case. The review that is provided ensures only that there is evidence to support some punitive damages, not that the evidence supports the amount actually awarded, thus leaving the possibility that a guilty defendant may be unjustly punished. Pp. 426-429.

(d) This Court has not hesitated to find proceedings violative of due process where a party has been deprived of a well-established common law protection against arbitrary and inaccurate adjudication. See, e. g., Tumey v. Ohio, 273 U.S. 510. Punitive damages pose an acute danger of arbitrary deprivation of property, since jury instructions typically leave the jury with wide discretion in choosing amounts and since evidence of a defendant's net worth creates the potential that juries will use their verdicts to express biases against big businesses. Oregon has removed one of the few procedural safeguards which the common law provided against that danger without providing any substitute procedure and without any indication that the danger has in any way subsided over time. Hurtado v. California, 110 U.S. 516, 538; International Shoe Co. v. Washington, 326 U.S. 310, distinguished. Pp. 430-432.

(e) The safeguards that Oberg claims Oregon has provided—the limitation of punitive damages to the amount specified in the complaint, the clear and convincing standard of proof, preverdict determination of maximum allowable punitive damages, and detailed jury instructions— do not adequately safeguard against arbitrary awards. Nor does the fact that a jury's arbitrary decision to acquit a defendant charged with a crime is unreviewable offer a historic basis for such discretion in civil cases. The Due Process Clause says nothing about arbitrary grants of freedom, but its whole purpose is to prevent arbitrary deprivations of liberty or property. Pp. 432-435.

316 Ore. 263, 851 P.2d 1084, reversed and remanded.

Stevens, J., delivered the opinion of the Court, in which Blackmun, O'Connor, Scalia, Kennedy, Souter, and Thomas, JJ., joined. Scalia,

Page 417

J., filed a concurring opinion, post, p. 435. Ginsburg, J., filed a dissenting opinion, in which Rehnquist, C. J., joined, post, p. 436.

Andrew L. Frey argued the cause for petitioners. With him on the briefs were Kenneth S. Geller, Charles A. Rothfeld, Evan M. Tager, Thomas W. Brown, Jeffrey R. Brooke, and Paul G. Cereghini.

Laurence H. Tribe argued the cause for respondent. With him on the brief were William A. Gaylord, Kenneth J. Chesebro, Michael H. Gottesman, and Raymond F. Thomas.[*]

Page 418

Justice Stevens delivered the opinion of the Court.

An amendment to the Oregon Constitution prohibits judicial review of the amount of punitive damages awarded by a jury "unless the court can affirmatively say there is no evidence to support the verdict." The question presented is whether that prohibition is consistent with the Due Process Clause of the Fourteenth Amendment. We hold that it is not.

I

Petitioner Honda Motor Co., Ltd., manufactured and sold the three-wheeled all-terrain vehicle that overturned while respondent was driving it, causing him severe and permanent injuries. Respondent brought suit alleging that petitioner knew or should have known that the vehicle had an inherently and unreasonably dangerous design. The jury found petitioner liable and awarded respondent $919,390.39 in compensatory damages and punitive damages of $5 million. The compensatory damages, however, were reduced by 20% to $735,512.31, because respondent's own negligence contributed to the accident. On appeal, relying on our then-recent decision in Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991), petitioner argued that the award of punitive damages violated the Due Process Clause of the Fourteenth Amendment, because the punitive damages were excessive and because Oregon courts lacked the power to correct excessive verdicts.

The Oregon Court of Appeals affirmed, as did the Oregon Supreme Court. The latter court relied heavily on the fact that the Oregon statute governing the award of punitive damages in product liability actions and the jury instructions in this case[1] contain substantive criteria that provide

Page 419

at least as much guidance to the factfinders as the Alabama statute and jury instructions that we upheld in Haslip. The Oregon Supreme Court also noted that Oregon law provides an additional protection by requiring the plaintiff to prove entitlement to punitive damages by clear and convincing evidence rather than a mere preponderance. Recognizing that other state courts had interpreted Haslip as including a "clear . . . constitutional mandate for meaningful judicial scrutiny of punitive damage awards," Adams v. Murakami, 54 Cal.3d 105, 118, 813 P.2d 1348, 1356 (1991); see also Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs., Inc., 88 Md.App. 672, 596 A.2d 687 (1991), the court nevertheless declined to "interpret Haslip to hold that an award of punitive damages, to comport with the requirements of the Due Process Clause, always must be subject to a form of post-verdict or appellate review that includes the possibility of remittitur." 316 Ore. 263, 284, 851 P.2d 1084, 1096(1993). It also noted that trial and appellate courts were "not entirely powerless" because a judgment may be vacated if "there is no evidence to support the jury's decision," and because "appellate review is available to test the sufficiency of the jury instructions." Id., at 285, 851 P. 2d, at 1096-1097.

Page 420

We granted certiorari, 510 U.S. 1068 (1994), to consider whether Oregon's limited judicial review of the size of punitive damages awards is consistent with our decision in Haslip.

II

Our recent cases have recognized that the Constitution imposes a substantive limit on the size of punitive damages awards. Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1(1991); TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993). Although they fail to "draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable," id., at 458; Haslip, 499 U.S., at 18, a majority of the Justices agreed that the Due Process Clause imposes a limit on punitive damages awards. A plurality in TXO assented to the proposition that "grossly excessive" punitive damages would violate due process, 509 U.S., at 453-455, while Justice O'Connor, who dissented because she favored more...

To continue reading

FREE SIGN UP